Euro zone Leaders to Hold Emergency Summit on Greece
For all the headline coverage of yesterday’s eurogroup meeting, the main headline is that a deal wasn’t reached. Greece look to be a bit more serious about being back at the table and there is another emergency meeting scheduled for Monday, but as it stands all is as it was.
Alex Tsipras said this morning that ‘Grexit would be the beginning of the end for Europe’ and he’s probably right, assuming Greece moving back to their own currency, revaluing their debt and relying on domestic production than imports goes to plan. If it does turn out to be only short term pain, other countries will be weighing up their options and the rise of the far right parties across Europe will be swift.
Monday’s meeting could well be under different circumstances though, as the ECB told minsters yesterday that Greek banks wouldn’t be able to open for business on Monday because of a shortage of cash. This may just be smoke, but we know there’s fire and as such we still wouldn’t write off the chance of their being some kind of capital control imposed in the next 24 hours.
US Movers
Donald Trump running for president is cause for concern for some Republicans. They fear that Mr Trump’s approach, which is to slate his fellow Republican nominees as well as their ‘weak’ policy stances, could well turn people off of the party all together as thy fear it is too hard line and too racist. They are even planning to try and keep him out of the Television debates… but we can’t imagine TV execs allowing that to happen and we’re sure Mr Trumps deep pockets can convince them to let him stay.
June FOMC statement failed to provide any strong hints on when monetary policy tightening might take place exactly. In her press statement, Fed Chairperson Yellen said that no decision has been made on the actual timing of their liftoff, which is the term FOMC members are using to mark the start of their tightening cycle. She even tried to downplay the importance of the first Fed rate hike by saying that the trajectory of their policy (another fancy term for the longer-term path of interest rate changes) is what truly matters.
The Fed statement didn’t seem to dwell too much on the downturn in price levels, which suggests that policymakers are no longer as concerned about weak inflation as they used to be in their previous announcements. Yellen acknowledged that the drop in energy prices has been mostly concentrated towards the end of 2014 and early this year, citing that price levels seem to have stabilized so far.
In Asia …
investors look to be running for the hills, as the Shanghai stock index fell more than four percent overnight. Global markets had performed well, as did the rest of Asia, but investors fear the bubble is bursting – which is becoming a self-fulfilling prophecy. The index has lost more than11% this week.
Today we look for UK borrowing numbers, to see if George Osborne is getting any closer to his ‘budget surplus during the good times’ pledge. The ECB have an emergency meeting today to discuss Greece’s liquidity problems. Greece want an extra €3bn in emergency funding, but the ECB will be reluctant to hand that over. We’re likely to see some big moves in FX markets on any chatter from Greece, good bad or otherwise.
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